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The impact of economic sanctions on Russia and Belarus

Vixen

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My international professional body (which includes USA) has just announced:

stands in compliance with the imposed economic sanctions. To that end, we are suspending indefinitely the sale and delivery of services to Russia and Belarus,

...including marketing and membership services (incl student exams).

How effective are economic or business sanctions?
 
My international professional body (which includes USA) has just announced:



...including marketing and membership services (incl student exams).

How effective are economic or business sanctions?

Every little bit helps...

• An average roll of US toilet paper costs about 84c and has about 150 sheets = .56c (about a half cent) per sheet.
• The ruble is ₽107 to US$1 - one ruble is worth about .93c (less than one US cent)
• One ruble will therefore buy you less than two sheets of toilet paper.

So when people quip that the ruble is in the toilet, that is almost literally true,

The idea appears to have two main aims;

1. To make the ruble so worthless that Russia will not be able to afford to do things like make or buy weapons, ammunition and other materiel to support his war, and

2. To make life very difficult for the average Russian. Since Putin lies to his people about the war, the idea is that they will most likely blame him for the conditions they find themselves living in.

Whether it works or not is another matter, but I would support any and all of these measures be taken against a any ruthless fascist dictator whether he has invaded another country or not.
 
This Australian (?) economist comes to the conclusion that Russia's economy is on a par with Cyprus or El Salvador.




#Economics #Russia #Ukraine
The Rather Pathetic Economy of Russia


He ranks it as 11th in terms of GDP but weak otherwise.
 
Every little bit helps...

• An average roll of US toilet paper costs about 84c and has about 150 sheets = .56c (about a half cent) per sheet.
• The ruble is ₽107 to US$1 - one ruble is worth about .93c (less than one US cent)
• One ruble will therefore buy you less than two sheets of toilet paper.

So when people quip that the ruble is in the toilet, that is almost literally true,

The idea appears to have two main aims;

1. To make the ruble so worthless that Russia will not be able to afford to do things like make or buy weapons, ammunition and other materiel to support his war, and

2. To make life very difficult for the average Russian. Since Putin lies to his people about the war, the idea is that they will most likely blame him for the conditions they find themselves living in.

Whether it works or not is another matter, but I would support any and all of these measures be taken against a any ruthless fascist dictator whether he has invaded another country or not.

Another thing is, the oligarchs and siloviki will continue with their high life - yachts, dachas, jets, assets - mostly invested outside of Russia and will be "I'm all right, Jack" (as is e'er the way). Meanwhile Russia is a sprawling country with many small isolated villages, massive factories and communities built around the holhoz concept (collectives similar to the kibbutz) and they will continue to be just as poor as ever. Outside of Moscow and Leningrad people are still living in grim Soviet-era built crumbling tower blocks.

Nestlé is one company which so far has refused to cease trading with Russia and yet it holds so much power to cause dissatisfaction amongst the poeple when they can no longer get their baby feed, toiletries, starbucks (not so much), piazzas and what have you.

OTOH it could be argued it would be inhumane...?
 

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OTOH it could be argued it would be inhumane...?


... and invading a sovereign country, and bombing civilians isn't?

... and bombing a children's and maternity hospital isn't?

Not responding to Putin's war of aggression shows weakness, and when opponents of dictators show weakness, the dictators gain confidence from that? Does the image of Neville Chamberlain waving his piece of white paper, as he announced "peace in our time" shortly after returning from Munich, on September 30, 1938 mean anything?
 
Reuters is reporting that Russia has made its interest payment against bonds, thus averting default, which would have been the first time since 1998.

NEW YORK, March 21 (Reuters) - Russia's coupon payment on a sovereign bond maturing in 2029 was processed by correspondent bank JPMorgan Chase & Co (JPM.N), a source said on Monday, the second time in recent days the country appears to have averted default.

Russia had been due to make a $66 million payment to bondholders on Monday on the bond . read more

Last week, it paid interest due on two sovereign bonds, easing doubts about its willingness and ability to honor external debt after harsh sanctions were imposed by Western nations following its invasion of Ukraine.

Another interest payment becomes due 28 March 2022.

The country's next test is a $102 million payment on March 28 and after that on March 31 there is a $447 million payment that must be made in dollars. Its biggest payment of the year -- and its first full repayment of "principal", of $2 billion -- is due on April 4 . read more
ibid

So the next couple of weeks will be interesting.
 
Update: Nestlé has now announced it will pull out of Russia in respect of non-essentials, such as Kit-Kat chocolate biscuit bars, but will continue with humanitarian items such as baby food.

French car firm Renault refuses to stop trade with Russia, as does Nokian Tyres, even though one of its depots was destroyed by artillery in Ukraine.

Sanofi pharmaceutical firm is pulling out, apart from non-essentials:

Sanofi
@sanofi
· 1h
We stand in opposition to the Russian war in Ukraine and in full support of the position of the international community. We’ve stopped new spending not related to the supply of our essential and life-changing medicines and vaccines in Russia, as well as in Belarus.
Tweet

In other news, Putin is demanding countries pay in Rubles for gas and oil from Russia. It says it won't stop supply. Getting it in local currency it will get quite a lot of Rubles if it is billed in dollars or euros. Gets round the foreign currency problem.
 
Well, well... Renault is now out.

23.3. 23:18
Renault is once again suspending operations in its Moscow plant
The car company Renault announced late Wednesday night Finnish time that it would immediately suspend the operation of its Moscow plant. The report was reported by AFP and Reuters.

During the suspension, the company said it was "evaluating options" regarding its majority stake in Russian carmaker Avtovaz. Renault has a 69 percent stake in Avtovaz, making it the most dependent of Russia on Western car companies.

<snip>


Renault sold a total of more than 480,000 cars in Russia last year, more than in any country outside the company's home country of France. The French state is the largest owner of Reunault with 15.01%.
HS

The volte face is likely due to President Zelenskyy making a direct plea to them.

In his speech to the French Parliament, Ukrainian President Volodymyr Zelenskyi accused Reunault and other French companies of financing the war and "the murder and rape of children and women."
ibid
 
Sanctions beginning to bite. Long queues. Shortage of sugar. Stockpiling.

The sudden shortages are a first taste of what is going to be a hard year for Russia, marked by a massive economic contraction, high inflation and an unprecedented cutoff from the world for a globalised economy.

“I think we are steadily going back to a USSR,” said Elina Ribakova, deputy chief economist for the Institute of International Finance, indicating that the Russian government would likely continue to close off from the world economy. “I’m not seeing it as a temporary shock and then we’re going to go back to the liberal democracy and reintegration into the world, unless there is a change in government.”

As Russian troops pressed forward in Ukraine, stores in some big cities have reported shortages of essential products such as tampons. Prices on imported goods, such as Tide detergent, clothing, or toothpastes, have also skyrocketed as the rouble tumbled in value.
GUARDIAN


The shortages are also to do with the failures of the supply chains.
 
Finland breaks rail link with Russia.

There is one main rail link between Finland and Russia (I am not sure if the railway line between Petsamo and Kemi is still operational) and that is one run jointly by Finnish rail company VR and the Russia one, called Allegro. There were four passenger trains a day, which has been full of Russians exiting, either to their jobs in Europe before things shut completely, with airflights unavailable, or people simply packing up and leaving for good because of Ukraine. In addition, there are freight trains bringing in cargo.

So that is all now shut off as from today, close of play.

YLE

VR will suspend eastern freight traffic on Sunday
VR will suspend eastern freight traffic to Russia from tomorrow, ie Sunday 27 March. from. The reception of freight trains from Russia will be suspended and the wagons will be returned from Finland to Russia.

Freight traffic will be suspended for the time being. The reason for the interruptions is the sanctions imposed on Russia by the West.

- Due to the sanctions on the Russian railways (RZD), it is impossible to continue eastern traffic for the time being, Martti Koskinen , President of VR Transpoint, says in a press release.

Yesterday, VR also announced the suspension of passenger traffic, ie Allegro trains between Helsinki and St. Petersburg, to Russia from Monday.
 
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Now Heineken pulls out.

Dutch brewer Heineken has said it is pulling out of Russia, the latest in a number of Western firms which said they were leaving the country as a result of the invasion of Ukraine.

"We have concluded that Heineken's ownership of the business in Russia is no longer sustainable nor viable in the current environment," it said in a statement.
BBC

With the expected severe shortage of grain - much of which is exported from Ukraine, which now has problems even sowing/harvesting it - it seems quite likely beer prices will shoot up throughout Europe. Ditto spirits.
 
So now Putin wants payment for suppplies of gas from Gazprom in roubles, as of midnight or there will be disconnections, he threatens.

Russia has told "unfriendly" foreign countries they must start paying for gas in roubles or it will cut supplies.

Vladimir Putin has signed a decree stating buyers "must open rouble accounts in Russian banks" from Friday.

"Nobody sells us anything for free, and we are not going to do charity either - that is, existing contracts will be stopped," the Russian president said.

Mr Putin's demand is being seen as an attempt to boost the rouble, which has been hit by Western sanctions.
BBC

I find this a bit puzzling as it has always been good business practice to ask your customers to pay in your local currency, to avoid exchange rate losses (the bank always takes a margin). Of course, if you are a small business and they are multinational, then sometimes you don't have a choice but to accept however currency your customer pays you in.

One would imagine that whilst Putin is using good business sense to ask for payment in his local currency - roubles - OTOH would he really want to refuse payment just because it is in Euros or dollars? Money is money and cash in hand is always better as a rule of thumb than funds promised in two month's time. Hence, when I was in the newsprint industry, we would give News International a big discount for paying early and simply run the funds through a discount house. These funds were literally in the millions supplying paper for the newspaper runs (which then was a huge industry), yet we always preferred to take the money now at a discount rather than wait until the 30-days terms of credit.
 
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One would imagine that whilst Putin is using good business sense to ask for payment in his local currency - roubles - OTOH would he really want to refuse payment just because it is in Euros or dollars?

I don't think we need to assume Putin is playing 4D chess here. If the customer nations won't cave in and help prop up the Rouble, then he has a reason to turn off their gas. Not a good enough reason to win a breach of contract suit but a good enough reason for domestic politics.
 
One would imagine that whilst Putin is using good business sense to ask for payment in his local currency - roubles - OTOH would he really want to refuse payment just because it is in Euros or dollars? Money is money and cash in hand is always better as a rule of thumb than funds promised in two month's time. Hence, when I was in the newsprint industry, we would give News International a big discount for paying early and simply run the funds through a discount house. These funds were literally in the millions supplying paper for the newspaper runs (which then was a huge industry), yet we always preferred to take the money now at a discount rather than wait until the 30-days terms of credit.
To the best of my understanding, buying in Roubles strengthens the Rouble since people need to acquire roubles. Much of American wealth comes from trade being conducted in dollars and people feeling that their money is safe in dollars. If Russia trades in Dollars or Euros they are making their enemy stronger and the US can just seize the new dollars they have just been paid, if they insist on trading in Roubles, then they make themselves stronger and build an alternative financial system that isn't controlled by the enemies.

It's not as if this is the first time this has been tried, it's just the first time a country with nuclear weapons has tried it.
 
I for one am willing to accept both higher utility prices, taxes to deal with that for the poorer part of the nation and food/gasoline prices if that means we'll stick to our guns and let him turn of the gas to the EU.
Sure, it'll (significantly) hurt me in the short term, but the total collapse of the Russian economy might actually oust Putin.

Signals seem to be that the EU is actually willing to take that economic hit, so here's hoping.
 
I for one am willing to accept both higher utility prices, taxes to deal with that for the poorer part of the nation and food/gasoline prices if that means we'll stick to our guns and let him turn of the gas to the EU.
Sure, it'll (significantly) hurt me in the short term, but the total collapse of the Russian economy might actually oust Putin.
All that stuff is a given. The potential downside if the US loses here is the dollar stops being the global reserve currency and a collapse in US prestige and power. Currently the Rouble is pretty much back to its strength against the dollar with the dollar at the start of the crisis.
 
Now Heineken pulls out.

BBC

With the expected severe shortage of grain - much of which is exported from Ukraine, which now has problems even sowing/harvesting it - it seems quite likely beer prices will shoot up throughout Europe. Ditto spirits.




This means war!
 
Lithuania cuts off Russian gas completely.

'The rest of Europe can do it too' - Lithuania drops Russian energy
Lithuania’s energy ministry on Saturday said the country would no longer import natural gas from Russia - saying it was breaking "energy ties with the aggressor".

"If we can do it, the rest of Europe can too," President Gitanas Nauseda tweeted.
BBC

I recall Gazprom and various other 'dodgy' enterprises advertising extensively during the recent EURO football finals. (Sponsorship has ruined the game IMV.)
 
Bloomberg has published an estimated effect on EU countries GDP should it cut off Russian energy supplies:

While the impact for France would be “modest,” with a decline of about 0.15% to 0.3% in gross national income, nations including Lithuania, Bulgaria, Slovakia, Finland and the Czech Republic could experience drops of as much as 5%, projections by the Conseil d’Analyse Economique released on Monday showed.

<snip>

The Conseil d’Analyse Economique, a non-partisan research center that answers to France’s prime minister, said the EU could limit the economic impact for its members by opting for high tariffs on Russian fossil fuels instead of a total embargo.
Bloomberg


I am not sure Bloomsberg has factored in the following:

"Finland will become self-sufficient in electricity in 2023 or by 2024 at the latest With the completion of the Olkiluoto 3 nuclear power plant and increasing wind power production, Finland will produce annually as much as it consumes. "
 

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A few quick thoughts:

1. The opening post asks: "How effective are economic or business sanctions?"
Doesn't specify "effective" in what. What is the goal? Is the goal measurable such that we could compute a specific effectiveness in terms of, say, x billion US$ per 1 unit of Z, whatever the target variable Z?

2. Someone mentioned Russian consumers stockpiling sugar on a rumor that there is a shortage in sugar, and this results in an actual shortage in sugar in stores.
The exact same happens currently in Germany, with (sunflower seed) oil and (wheat) flour: People heard that we import much wheat and sunflower seeds from Ukraine and Russia, so people rush to stockpile those products, with the results that shelves for oil and flour are indeed empty. I am currently out of wheat flour and can't buy any[*]. This is in Germany! The problem is not any sanctions, the problem is irrational behavior in reaction to news.
[*]ETA: I still do have flour of buckwheat, chickpeas, spelt and rye, and I think those are still available in stores, as people are slow at adopting these great alternatives. My experiments in pancakes can and will continue unhindered:)).

3. Someone claimed that the US could seize the US$ that European customers give Russia in exchange for the Rubles they need to buy natural gas. This is not a given. I am sure Russia's plan is to have those currencies transferred to a place where it can't be seized.

4. Someone reported that Lithuania just decided to buy no more Russian gas.
This is a bit self-serving and probably makes no difference in fact: Gas streams from Russia through a small number of pipelines into a small number of hubs inside the EU, from whence it gets distributed to all connected member states. There is a grand total of 100% of pipeline gas that gets shoved around at any time, of which X% comes from Russia, and 100-X% comes from countries other than Russia. If a small country like Lithuania decreases its purchase of Russian gas to zero, that volume will slosh somewhere else, and some other countries will import a tad more Russian gas. Or not even that: At any time, the actual gas that is burned at some specific location may have originated from Russia, or from some Liquid Gas terminal, or even from a storage facility that has mixed Russian/non-Russian gas.
This is similar to me having an electricity contract where I purchase 100% renewable power: Of course when I heat my home with electricity on a windless night just to hurt Putin and his war by not using his blood gas, the actual electricity produced at that time will be close to 100% non-renewable. What happens there is merely a trick of accountancy: I purchase the renewable energy that someone else uses during the day, and in return use the non-renewable energy that someone else pays for during the day. As a result of me reducing my non-renewable use (on paper), someone else (probably some industry) increases their non-renewable on-paper share of energy.

5. It has been said a lot - but not really in this thread: Sanction almost never work to achieve their grand objectives, like deposing dictators, ending wars, freeing peoples or causing democratic revolutions. They just don't. It is well known that they even tend to stabilize authoritarian regimes.
What they MAY achieve is slow down economic and particularly technological development, and thus decrease somewhat (by "y%") the real capacity of the targeted regime to project harm - like build up / maintain their military, slush funds for bribes and terrorists, etc. In fact I have seen it claimed that the sanctions against Russia since 2014, particularly in terms of technology transfer, have had effect towards the bad state of the Russian armed forces that we are all surprised to witness in 2022.

6. I think it is pretty straightforward that purchasing less fossil fuels from Russia directly hurts the country and particularly its elite.
But as Europe has neglected to seriously phase out the use of fossil fuels with absolutely the highest priority of all, it also hurts Europe's economy directly - only this time everybody, in the form of higher energy prices (which directly trigger inflation, as every wealth produced contains energy) and (if there will be actual shortages with Russia switching off the supply) loss of industrial production.
This will, in the long run, be a bigger problem for Russia - and by long run I mean at least >5 years, perhaps >10 years. After that, it will be a win for everybody.
I thus tend to be in favor of risking our gas supply. Scarcity has a way of making people clever and industrious to find solutions, quickly.
In the long run, we just need to keep most of the remainder of the fossil fuels in the ground, forever. We need not deplete Russian gas nor that of Qatar, nor the oil of Venezuela. I have a faint hope that, decades down the road, history will describe this war as the turning point towards getting a grip on global warming.
 
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Sanctions definitely have an impact, but they often seem not to do much to effect regime change or stop aggression.

In the short term aggressive sanctions will definitely have the impact of making the average Russian much poorer. I see no reason to believe this will actually lead to Putin being overthrown or lead to radical change in heart concerning the invasion of Ukraine, but I suppose sanctions could be justified in the hope that a general blow to the economy may reduce Russia's ability to wage war.

Sometimes they work to change policy of the target nations, sometimes not. Conceivably they could even backfire, resulting in Russia becoming even more insular and embittered with their neighbors and the West generally.
 
Sanctions probably have more of a deterrent effect than anything else.

Q. Why cause trouble when it will cut into my profits from peaceful commerce?

A. Because I want something commerce won't give me, and I'm willing to forgo those profits to get what I want.

So the sanctions are already baked into the calculus for when to start trouble. After that, they probably have two effects:

1. Increasing the reluctance to continue the trouble. They're not going to have any kind immediate, binary on/off effect on the troublemaker. But sooner or later the troublemaker will hit the point of diminishing returns. Sanctions probably help get them to that point sooner. "Sooner" can still be "unpleasantly late", though.

2. Negotiating tokens. Having taken something away, it can be put on the table as something to give back, in exchange for something from the troublemaker, if and when the troublemaker finally decides it's in their best interest to stop making trouble and start talking about a deal.
 
This could be controversial: Finnish customs (as well as having seized yachts and the usual oligarchy type paraphanalia) have seized important Russian works of art belonging to the Hermitage Museum in St Petersburg, which presumably had been borrowed by Finnish art galleries and were being returned as part of the panic by its Russian curators.

Among the paintings, statues and various antiques
Now the questions for journalists begin.

Is this a seizure?

Customs has issued a seizure order.

The recipients would have been several Russian museums, it is considered possible that there are also works from the Hermitage Art Museum in St. Petersburg.

The objects are now stored in a place deemed appropriate by the National Board of Antiquities for valuable works of art.
YLE


Wow. Strange.

The Russian media is reporting it as their having been on loan to Italy as YLE continues here:

Russian media: The works were on loan in Italy, see the exhibition
According to the independent newspaper Fontanka in St. Petersburg, the objects in question would be paintings en route from Milan to St. Petersburg.

The paintings were borrowed from the Hermitage Art Museum and were on display at the Gallerie d’Italia’s Gran Tour. A dream from Italy in Venice to Pompeii.

You can participate in the virtual tour of that exhibition here .
ibid
 
Sanctions probably have more of a deterrent effect than anything else.

Q. Why cause trouble when it will cut into my profits from peaceful commerce?

A. Because I want something commerce won't give me, and I'm willing to forgo those profits to get what I want.

So the sanctions are already baked into the calculus for when to start trouble. After that, they probably have two effects:

1. Increasing the reluctance to continue the trouble. They're not going to have any kind immediate, binary on/off effect on the troublemaker. But sooner or later the troublemaker will hit the point of diminishing returns. Sanctions probably help get them to that point sooner. "Sooner" can still be "unpleasantly late", though.

2. Negotiating tokens. Having taken something away, it can be put on the table as something to give back, in exchange for something from the troublemaker, if and when the troublemaker finally decides it's in their best interest to stop making trouble and start talking about a deal.
This does all rather make it seem like a purely commercial calculation. Don't sanctions also often have the effect of hardening support within the sanctioned country around the regime?

In any case, this all seems very similar to the logic towards the end of the 19th Century that the more commercially interconnected the countries of Europe were, the more inconceivable a war would be because it would not be in the commercial interests of any country to have a war.
 
A few quick thoughts:

1. The opening post asks: "How effective are economic or business sanctions?"
Doesn't specify "effective" in what. What is the goal? Is the goal measurable such that we could compute a specific effectiveness in terms of, say, x billion US$ per 1 unit of Z, whatever the target variable Z?

2. Someone mentioned Russian consumers stockpiling sugar on a rumor that there is a shortage in sugar, and this results in an actual shortage in sugar in stores.
The exact same happens currently in Germany, with (sunflower seed) oil and (wheat) flour: People heard that we import much wheat and sunflower seeds from Ukraine and Russia, so people rush to stockpile those products, with the results that shelves for oil and flour are indeed empty. I am currently out of wheat flour and can't buy any[*]. This is in Germany! The problem is not any sanctions, the problem is irrational behavior in reaction to news.
[*]ETA: I still do have flour of buckwheat, chickpeas, spelt and rye, and I think those are still available in stores, as people are slow at adopting these great alternatives. My experiments in pancakes can and will continue unhindered:)).

3. Someone claimed that the US could seize the US$ that European customers give Russia in exchange for the Rubles they need to buy natural gas. This is not a given. I am sure Russia's plan is to have those currencies transferred to a place where it can't be seized.

4. Someone reported that Lithuania just decided to buy no more Russian gas.
This is a bit self-serving and probably makes no difference in fact: Gas streams from Russia through a small number of pipelines into a small number of hubs inside the EU, from whence it gets distributed to all connected member states. There is a grand total of 100% of pipeline gas that gets shoved around at any time, of which X% comes from Russia, and 100-X% comes from countries other than Russia. If a small country like Lithuania decreases its purchase of Russian gas to zero, that volume will slosh somewhere else, and some other countries will import a tad more Russian gas. Or not even that: At any time, the actual gas that is burned at some specific location may have originated from Russia, or from some Liquid Gas terminal, or even from a storage facility that has mixed Russian/non-Russian gas.
This is similar to me having an electricity contract where I purchase 100% renewable power: Of course when I heat my home with electricity on a windless night just to hurt Putin and his war by not using his blood gas, the actual electricity produced at that time will be close to 100% non-renewable. What happens there is merely a trick of accountancy: I purchase the renewable energy that someone else uses during the day, and in return use the non-renewable energy that someone else pays for during the day. As a result of me reducing my non-renewable use (on paper), someone else (probably some industry) increases their non-renewable on-paper share of energy.

5. It has been said a lot - but not really in this thread: Sanction almost never work to achieve their grand objectives, like deposing dictators, ending wars, freeing peoples or causing democratic revolutions. They just don't. It is well known that they even tend to stabilize authoritarian regimes.
What they MAY achieve is slow down economic and particularly technological development, and thus decrease somewhat (by "y%") the real capacity of the targeted regime to project harm - like build up / maintain their military, slush funds for bribes and terrorists, etc. In fact I have seen it claimed that the sanctions against Russia since 2014, particularly in terms of technology transfer, have had effect towards the bad state of the Russian armed forces that we are all surprised to witness in 2022.

6. I think it is pretty straightforward that purchasing less fossil fuels from Russia directly hurts the country and particularly its elite.
But as Europe has neglected to seriously phase out the use of fossil fuels with absolutely the highest priority of all, it also hurts Europe's economy directly - only this time everybody, in the form of higher energy prices (which directly trigger inflation, as every wealth produced contains energy) and (if there will be actual shortages with Russia switching off the supply) loss of industrial production.
This will, in the long run, be a bigger problem for Russia - and by long run I mean at least >5 years, perhaps >10 years. After that, it will be a win for everybody.
I thus tend to be in favor of risking our gas supply. Scarcity has a way of making people clever and industrious to find solutions, quickly.
In the long run, we just need to keep most of the remainder of the fossil fuels in the ground, forever. We need not deplete Russian gas nor that of Qatar, nor the oil of Venezuela. I have a faint hope that, decades down the road, history will describe this war as the turning point towards getting a grip on global warming.

1. 'Effective' as in moderating the economic behaviour of the state being sanctioned. For example, we know the Chancellor controls consumption of alcohol by slapping tax and high 'duty' on it or an enterprise such as a supermarket making one or two products less than profitable - such as baked beans or bread - as 'loss leaders' to encourage shoppers into buying a whole lot more which would be at a profit.

The aim of sanctions here is to tell Russia, stop invading Ukraine or we won't buy your goods any more or sell to you.

Question: how well does this have the desired effect? How to compute: the ability of Russia to pay off its monthly interest on its debts. The effect on its costs of living and inflation/interest indices. One reason the USSR fell was because it was broke. People were bartering as there was no money. So can this situation be brought about artificially by embargo? And if so, does it have any effect on stopping Russian war-mongering or does it strengthen their resolve and hatred of the west?

2. It will have a definite effect on the supply of grain as from what I understand, Ukraine is sowing significantly less due to obstructions by Russian troops int he country and shortage of labour due to mass exodus of the inhabitant. It is probably wise to stock up IMV of goods that will keep as you never know when there will be a sudden emergency or longer-term shortage. One newspaper ran an article saying one should always have at least three-days worth of food and stock, albeit not mentioning the war. I could not get the usual Iodine tablets as it is all sold out but I have managed to get a couple of iodine supplements, which is better than nothing (the blurb says, 'not intended for radiation situations') Thanks to the pandemic and living in a country that can have severe winters, I have learnt to 'hamster' as it is called here. (Hoard enough stuff so you don't need to shop for a few weeks.)

3. Some of this has happened with Russia being restricted from accessing gold and US Dollars. However, this affects the US dollar as well if the Japanese Yen is used instead. Problem with foreign currency is that interest chases exchange rates, itself dependent on bank activity and manipulation of markets.

4. IMV countries have been too willing to become dependent on Russia, as with Gazprom. It always was going to be used as a tool against you. Plus the issue of climate change means it is probably not a bad idea to look at alternatives to we do now. IMV the less the dependency on a hostile power, the better, even if it means a more expensive alternative.

5. The sanctions against Russia over Crimea did not go nearly as far enough they could have with western leaders such as the UK government falling over themselves to attract Russian oligarchs' money and who cares where it came from. There is egg on face as the same leaders realise they have been used for quite sinister aims.

6. Russia does have other natural resources in global demand, particulary in palladium and nickel. The car industry is quite dependent on this for silcon chip technology and there is already a world shortage in this, so I would recommend buying a new car now and perhaps a few spare laptops and smartphones, in case they become unavailable in the medium to long-term.

Good time to think of going green. Switch from petrol and diesel to all electric. I have a hybrid - didn't go for electric because I was unsure of charging facilities and prices are high, which are sure to come down as popularity increases.
 
Follow up: Russia is getting upset about Finnish customs hanging onto a Russian art collection.

According to the Russian news agency TASS, the chairman of the Duma Vyacheslav Volodin has stated today in the plenary session of the Duma that Finland must return the works of art belonging to the Hermitage's collection, and also pay a fine.

- Let us give instructions to the Committee on Culture and also on security, Volodin replied when the legislators asked about the situation regarding works of art.
YLE

Worth €42m.
 
This does all rather make it seem like a purely commercial calculation.
I never imagined sanctions were anything else.

Don't sanctions also often have the effect of hardening support within the sanctioned country around the regime?
I think the topic of support for the regime within the country is a red herring in almost every context. Maybe if the CIA has some credible plan already in action to foment a popular uprising and coup, they could talk about the adverse effects of sanctions, with the president, behind closed doors. Pretty much anywhere else, my stock response is, "I have no opinion about that."

In any case, this all seems very similar to the logic towards the end of the 19th Century that the more commercially interconnected the countries of Europe were, the more inconceivable a war would be because it would not be in the commercial interests of any country to have a war.
"Peace makes plenty," I like to say. War may drive investment in innovation, but peace is where the dividends are paid.
 
Russia's credit rating downgraded by Standard & Poor. Reuters reports that Russia is on the verge of insolvency. It paid its USD interest payment in Roubles. This has not gone down well, it seems.

CREDIT RATING AGENCY Standard & Poor's (S&P) has downgraded Russia's foreign currency credit rating, Reuters reports. Lowering the currency rating means that Russia is once again one step closer to insolvency.

The rating dropped from CC to SD. CC means that the repayment of the debt is very uncertain. The SD level means that the debtor is unable to pay certain parts of his debt.

Russia has paid off its dollar-denominated government debts in rubles this week and, according to S&P, has thus deliberately defaulted on its obligations. According to the credit rating agency, Russia's reluctance to comply with these obligations is likely to increase further if the economic sanctions imposed on it are tightened. Russia ended up under severe economic sanctions after attacking Ukraine on 24 February.

“We do not expect investors to be able to convert these rubles into dollars and match the payments that were originally due,” the S&P press release says.

RUSSIA'S finance minister, Anton Siluanov , told Reuters on Thursday that the country would do everything it could to pay its creditors. However, the country intends to continue to pay its debts in rubles as long as its foreign exchange reserves are frozen due to sanctions.
HS
 
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You want some predictions? How about: I wouldn't be surprised if Putin and a few oligarchs end up richer at the expense of the Russian people.

The best known way to make money out of the stock market or currency exchange is to buy low and sell high. Like, if you expect the Ruble to go up, you buy a few billion $ worth Rubles when it's low, and sell it back to $ when it recovers. However, there is a second way: betting that something will go DOWN. (A.k.a., shorting.) It goes something like this: borrow a few billion $ worth of Rubles before such an attack, convert them immediately to $. Then when the currency goes down, buy the Rubles to pay back the loan at a fraction of the $ amount you got at the start of it all.

And frankly, it was

A. really THAT predictable that the Ruble will go down. It happened every single time that Russia attacked someone.

And, even more crucially:

B. if you're Putin or his inner circle, you know exactly WHEN it's going to happen. Because it's him pulling the trigger to cause it.
 
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The type of person that is Putin and his cronies always get richer - until the torches and pitchforks burn down their mansions.
 
It might take a long while for that kind of information to trickle down to the people, though. Most won't hear that Putin drove their economy into the ground to line his pockets, but that it's those dastardly nazis in NATO and the nazis in Ucraine and the nazis under his bed when he goes to sleep.
 
It might take a long while for that kind of information to trickle down to the people, though. Most won't hear that Putin drove their economy into the ground to line his pockets, but that it's those dastardly nazis in NATO and the nazis in Ucraine and the nazis under his bed when he goes to sleep.

It's asking a lot for the besieged not to be resentful of those besieging them. Not that I think sanctioning Russia isn't a good idea, anything that reduces their ability to wage war and extracts a punishment for their aggression is a good idea, but I don't think there's much hope for any good feelings towards the West for the foreseeable future.
 
I'm not asking them to do anything, least of all love anyone. I'm just saying that it's probably as safe as it gets for Putin to line his own pockets and those of his closest bootlickers, even if it's at the expense of driving his own people into poverty. Precisely BECAUSE, yes, then he can blame it on those darned NATO besiegers. Yes, their attention will stay focused on NATO. And yes, that's precisely where you want that focus to stay if you're busy robbing them blind.
 
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Re Finland Customs blocking release of valuable art works back to Russia (as you know art collections often go out 'on loan' to other galleries). It has now passed a law to exclude valuable art collections - it says that although the nominal value of the works is €46m it is actually 'priceless' - from being included in 'the sanction of 'luxury goods' to Russia. So Russia gets them all back, unopened and unexamined.

In addition, all post and freight in and out of Russia has been stopped.
 
NOKIA pulls out of Russia:

Telecom giant Nokia has announced it is pulling out of Russia, the latest in a flood of foreign companies that are leaving amid punishing Western sanctions imposed over Moscow's war in Ukraine.

The Finnish company's chief executive officer told Reuters that the decision to indefinitely suspend operations was the only option.
rferl.org

It affects 2,000 jobs. Russia's economy is expected to contract by at least 11% and up to 20% as a result of sanctions.
 
This guy here believes that with Russia cut off from hi-tech, it could be just months, or even weeks away from economic collapse.

 
I see some people still are having problems adjusting to the fact we are in a new Cold War.
 
NOKIA pulls out of Russia:

rferl.org

It affects 2,000 jobs. Russia's economy is expected to contract by at least 11% and up to 20% as a result of sanctions.

That's the way to stop Russia rearming - cripple them financially.

There's some kind of double joke in there about Nokia, and also about Russia's economy being crippled by Nokia's withdrawal.
 
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